Mortgage Procedure

When you buy a home in Canada, the procedure will be very similar even though you maybe live in a different province and there are different mortgage acts or related legislation. Here, we will introduce you the main procedure in the province of Ontario.

step1Budget Your Home Value & Type
You need to budget how much money you are affordable for your new home first, before you search any property. And you also need to decide what kind of home you like to buy, like single detached house, townhouse or condo apartment… Condo usually has high condo fee (maintenance fee), but mostly includes heating and water. You can read the  definition if you have any terminology confused or unclear. During this step, you need to calculate how much monthly payment you are affordable based on your family income. Regarding how to calculate the mortgage affordibility you can get based on your income, please go to page “Self Evaluation“.
  
 
 
step2Check Your Credit Report Yourself First (Recommended)
Before you contact and apply mortgage application, we recommend you to check your credit report yourself first. That will reduce the possibility of rejection. If any mistake in your credit report, you can explain and resolve it first before applying mortgage. Most banks and lenders will check your credit report from one of credit bureaus, Trans Union or Equifax. You check the credit report yourself will not influence your credit score. You can order your credit report from the websites of Trans Union or Equifax. Currently, most lenders use the report from Equifax.  Please remember, all loans and lower mortgage rates are to the applicants who have good credit score and payment history. Your credit score will influence much for your final mortgage rate and conditions of mortgage. If you hope to get the lowest rate from the current market, you’d better have a plan to keep your credit score more than 700 with good payment history within 24 months. This plan may be 3 ~ 6 months, or 1 ~ 2 years to build your good credit, depends on your recent credit status. For more information of how to build your good credit history and score, please “Apply Online“. Our mortgage planner will teach you for free.
     
 
step3Searching Lenders & Comparison
After your self-evaluation, you know how much mortgage amount you can get from the lender. Note: all lenders almost use same standards to approve your mortgage application. If one bank approve your mortgage application with an amount of 300,000 dollars, almost other banks and lenders will approve same amount of mortgage, because most of lenders use the same evaluation standards, except some policies for target market. All you have to do is to compare mortgage rate and conditions. Some rates are very low, but with some conditions, like untransferable. So you need to know this kind of conditions. Most clients never or hardly notice this. When they find the problem, it’s too late to change after closing. So, we recommend here: compare the mortgage rates including conditions and choose the right lender that fits your family needs. The Lowest mortgage rates sometime are not the Best mortgage rates. The lenders you choose should not be only within banks, especially 5 chartered banks. Because except banks, there are about 70 ~ 90 mortgage lenders in Canadian mortgage market, and 20 ~ 40 lenders in your local market, including trust companies, insurance companies, credit unions, investment companies and so on. Many of them are offering much lower mortgage rates with similar conditions to Canadian residents. For saving your monthly payment and interest cost, we recommend you at least choose 1 to 2 mortgage agents (specialists). The mortgage rates from a mortgage agent really depends on how much commission he or she wants to get on your deal from the lenders. Here, we recommend you to contact us for a free solution of how to get the lowest mortgage rate you can. It’s top secret in mortgage industry.
      
 
step4Apply For Mortgage Application
After you choose the right lender, you need to fill up a detail application form. All related information are about your income, debt and assets. And you need to submit all support documents with your application. Each lender may have its own policy, but very similar. regarding what kinds of documents, please read page Documents Needed by Lenders. Recently, most mortgage applications are online, you can just fill up online and submit. The agent will contact you for supporting documents after your submission. The lenders mostly will take 2 business days to process your application.
 
     
step5Obtain and Lock Mortgage Rate
After you fax or send all supporting documents, the lender and mortgage agent will verify all of them, maybe make some calls to your reference people or employers, and pull out your credit report from a credit bureau. Then they will give you a rate they can. Yes, you DO negotiate during this step. And finally you obtain a mortgage rate you feel satisfied with. You can require to lock this rate for usually up to 4 months. If the rate drops down before the date of closing, you have the right to use the new rate (lower rate) instead; if it goes up, you can still use your locked rate. Once the lender has made the decision to lend, a commitment letter (or called a commitment or approval of mortgage loan) will be released by the lender and forwarded to you.  A Mortgage Insurance may be counted if your LTV (Loan-to-Value) is more than 80%.
      
step6 Close Your Home Purchasing Agreement & Start to Make Mortgage Payment
Before 1 or 2 days of your closing date, your lawyer will arrange you to sign some agreements, including mortgage agreement. Your lawyer will prepare a detail statement about reconciliation of the expense, payment and mortgage.You need to pay all money you have to pay according to that statement, including down payment at that time. After signing all documents, you just wait for the key. The lawyer will do all legal procedure for you on that closing date, including registry your title, insurance title, get money from lender, transfer money to seller’s lawyer and get key etc. After get the key, you can move in your new home. Your lawyer will transfer a copy of final Mortgage Agreement to you. That’s so simple, right?
                       
 
For knowing detail about mortgage, lenders standards & policies, please click page “Knowledge” .